Company agrees to pay $750K to settle allegations of illegal foreclosures on service members

Company agrees to pay compensation to service members to settle allegations of illegal foreclosures. (Getty Images)

A foreclosure services company has agreed to pay up to $750,000 to service members who lost their homes due to alleged illegal foreclosure, Justice Department officials announced Thursday.

According to the settlement agreement, Northwest Trustee Services Inc., of Bellevue, Washington, completed 28 foreclosures on homes owned by service members between January 2010 and July 31, 2017, without obtaining the required court orders, in violation of the Servicemembers Civil Relief Act (SCRA). The company will pay compensation of up to $125,000 to each of the service members. The amounts will vary, depending on the situation.

The SCRA prohibits foreclosing on the home of a service member during military service, or for one year afterward, without a court order if the mortgage was originated prior to the service member’s period of military service. In many cases this applies to reservists and Guard members called to active duty, but also to active-duty members who bought their home before entering active duty.

This is the Justice Department’s first SCRA lawsuit against a foreclosure trustee company. “We hope this case sends a strong message to foreclosure trustee companies and others that all foreclosures must comply with the Servicemembers Civil Relief Act,” said Acting Assistant Attorney General John Gore of the Civil Rights Division, in the announcement.

Justice officials wrapping up work identifying troops whose homes were wrongfully foreclosed on

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According to the company’s website, the business has closed its doors. Officials with the company could not be immediately reached for comment. The settlement agreement states that nothing in the settlement is to be construed as an admission of liability by Northwest Trustee Services for any of the allegations.

“Northwest Trustee may have shuttered its foreclosure business, but that does not end its obligation to do right by service members,” said Annette L. Hayes, U.S. Attorney for the Western District of Washington, in the announcement.

“Those who serve in our military deserve zealous representation of the rights,” she said. “We are working to ensure that service members whose homes were illegally foreclosed on by Northwest Trustee receive up to $125,000 in compensation.”

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The agreement covers non-judicial foreclosures initiated or completed by Northwest Trustee or any of its related businesses, from Jan. 1, 2010, through July 31, 2017.

Justice officials began their investigation into Northwest Trustee’s practices after Marine Corps veteran Jacob McGreevey of Vancouver, Washington, submitted a complaint to the Justice Department’s Servicemembers and Veterans Initiative in May 2016. Northwest had foreclosed on McGreevey’s home in August 2010, less than two months after he was released from active duty in Operation Iraqi Freedom.

Since 2011, Justice officials have obtained more than $468 million in monetary relief for service members through its enforcement of the SCRA, which provides protections in areas such as evictions, rental agreements, security deposits, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments.